-
First quarter revenue of $538.5 million
-
First quarter net loss attributable to Intelsat S.A. of $34.6
million
-
First quarter Adjusted EBITDA of $409.8 million or 76 percent of
revenue
-
$8.5 billion contracted backlog
-
Intelsat reaffirms 2017 Guidance
-
Exchange Offers and Consent Solicitations launched in March 2017
pursuant to Conditional Merger with OneWeb
LUXEMBOURG--(BUSINESS WIRE)--Apr. 27, 2017--
Intelsat S.A. (NYSE: I), operator of the world’s first Globalized
Network and leader in integrated satellite communications, today
announced financial results for the three months ended March 31, 2017.
Intelsat reported total revenue of $538.5 million and net loss
attributable to Intelsat S.A. of $34.6 million for the three months
ended March 31, 2017.
Intelsat reported EBITDA1, or earnings before net interest,
gain on early extinguishment of debt, taxes and depreciation and
amortization, of $398.1 million and Adjusted EBITDA1 of
$409.8 million, or 76 percent of revenue for the three months ended
March 31, 2017.
Intelsat’s Chief Executive Officer, Stephen Spengler, said, “Revenue of
$538 million and Adjusted EBITDA of $410 million for the first quarter
reflect our continuing business transition as we continue to make
progress on the initiatives that will enable new services and create top
line growth for our company. Over the course of the first quarter,
Intelsat 33e and Intelsat 32e entered into service. Our managed
services, IntelsatOne® Flex, are attracting new customers and
will begin to generate incremental revenues as these networks activate
over the course of 2017.”
Mr. Spengler continued, “Growth in our media business was driven by the
two fully-committed satellites placed into service in 2016. While we
continue to work through some near-term headwinds, our network services
and government businesses are leveraging the higher performance services
available from the Intelsat EpicNG network, which is now
available on five continents. Backlog as of March 31, 2017 was $8.5
billion.”
Mr. Spengler concluded, “Our proposed conditional merger with OneWeb,
which was announced on 28 February, is pending completion of our
announced debt exchange transactions and receipt of certain other
approvals. We believe the transaction creates a company with greater
growth opportunities and a strong financial foundation. Importantly, we
will be better positioned to achieve our shared mission to unlock new
applications for satellite-based solutions, connecting people and
devices everywhere.”
First Quarter 2017 Business Highlights
Intelsat provides critical communications infrastructure to customers in
the network services, media and government sectors. Our customers use
our services for broadband connectivity to deliver fixed and mobile
telecommunications, enterprise, video distribution and fixed and mobile
government applications. For additional details regarding the
performance of our customer sets, see our Quarterly Commentary.
Network Services
Network services revenue was $212.9 million (or 39 percent of Intelsat’s
total revenue) for the three months ended March 31, 2017, a decrease of
7 percent compared to the three months ended March 31, 2016.
Media
Media revenue was $225.1 million (or 42 percent of Intelsat’s total
revenue) for the three months ended March 31, 2017, an increase of 6
percent compared to the three months ended March 31, 2016.
Government
Government revenue was $91.9 million (or 17 percent of Intelsat’s total
revenue) for the three months ended March 31, 2017, a decline of 11
percent compared to the three months ended March 31, 2016.
Average Fill Rate
Intelsat’s average fill rate on our approximately 2,050 station-kept
wide-beam transponders was 78 percent at March 31, 2017, compared to 77
percent as of December 31, 2016. Note that Intelsat 31, an in-orbit
spare satellite, is not included in the station-kept transponder count.
Separately, our fleet includes approximately 650 36MHz units of
high-throughput Intelsat EpicNG capacity.
Satellite Launches
Intelsat 32e, the Intelsat EpicNG Ku-band payload, was
successfully launched on February 14, 2017 and entered service on March
30, 2017.
The company has two additional satellite launches scheduled for 2017:
Intelsat 35e in late June 2017 on a SpaceX, Falcon 9 rocket; and
Intelsat 37e in the third quarter of 2017 on an Arianespace, Ariane 5
rocket.
Contracted Backlog
At March 31, 2017, Intelsat’s contracted backlog, representing expected
future revenue under existing contracts with customers, was $8.5
billion, as compared to $8.7 billion at December 31, 2016.
Conditional Combination Agreement with WorldVu Satellites Limited
(“OneWeb”)
Intelsat and OneWeb announced on February 28, 2017 that they had entered
into a conditional combination agreement (the “Combination Agreement”),
pursuant to and subject to the terms and conditions of which, OneWeb,
the builder of a new Low Earth Orbit (“LEO”) global communications
system, will merge with and into Intelsat to create a next-generation
communications company (the “Merger”). In addition, subject to the terms
and conditions of a share purchase agreement between Intelsat and
SoftBank Group Corp. (“SoftBank”), which currently owns equity in OneWeb
and has additional investments in OneWeb pending subject to certain
conditions, SoftBank is expected to invest an additional $1.7 billion in
newly issued common and preferred equity of the combined company (the
“SoftBank Investment”) to support the acceleration of the combined
company’s growth strategies and strengthen Intelsat’s capital structure.
The Merger and the SoftBank Investment are expected to be completed late
in the third quarter of 2017, and are conditioned upon the consummation
of certain Intelsat debt exchange offers, the receipt of certain
regulatory approvals, and the consent and approval by both Intelsat and
OneWeb shareholders, as well as other customary closing conditions.
Further details on the status of the exchange offers are provided below.
There can be no assurance that the Merger or the SoftBank Investment
will be completed, or whether the terms will be amended from those
described above.
Capital Structure Activities
In January 2017, Intelsat (Luxembourg) S.A. completed an exchange offer
whereby it exchanged $403.3 million aggregate principal amount of its 6
¾% Senior Notes due 2018 (the “2018 Lux Notes”) for an equal aggregate
principal amount of its newly issued 12.5% Senior Notes due 2024 (the
“2024 Lux Notes”). This exchange consisted of the tender of $377.6
million aggregate principal amount of 2018 Lux Notes held by Intelsat
Connect Finance S.A. which it acquired as a result of exchange
transactions completed in December 2016, together with $25 million
aggregate principal amount of 2018 Lux Notes that Intelsat (Luxembourg)
S.A. repurchased in the first quarter of 2015.
On March 24, 2017, Intelsat S.A. announced that its indirect
wholly-owned subsidiaries, Intelsat Jackson Holdings S.A. (“Intelsat
Jackson”), Intelsat Connect Finance S.A. (“ICF”), and Intelsat
(Luxembourg) S.A. (“Intelsat Luxembourg” and, together with Intelsat
Jackson and ICF, the “Issuers”) each had commenced an offer or offers to
exchange (collectively, the “Exchange Offers”) certain of their
respective outstanding senior unsecured notes (the “Existing Notes”) for
new Exchange Notes.
The Exchange Offers and related Consent Solicitations are being
conducted pursuant to the Combination Agreement. The Exchange Offers are
subject to certain conditions precedent, including, among others, the
tender of a minimum of 85% of the aggregate outstanding principal amount
of each series of Existing Notes.
On April 21, 2017, Intelsat announced that the deadline for tenders in
the Exchange Offers had been extended to May 10, 2017.
Financial Results for the Three Months Ended March 31, 2017
On-Network revenues generally include revenue from any services
delivered via our satellite or ground network. On-Network services also
include revenues from our channel services product, which are not
detailed here as they are immaterial in size and we no longer actively
market these services. Off-Network and Other Revenues generally include
revenue from transponder services, Mobile Satellite Services (“MSS”) and
other satellite-based transmission services using capacity procured from
other operators, often in frequencies not available on our network.
Off-Network and Other Revenues also include revenue from consulting and
other services and sales of customer premises equipment.
Total On-Network Revenues reported a decline of $2.4 million to
$491.4 million as compared to the three months ended March 31, 2016:
-
Transponder services reported an aggregate decrease of $1.5
million, primarily due to a $19.3 million decrease in revenue from
network services customers, partially offset by a $17.8 million
increase from media customers. The network services decline was mainly
due to previously noted lower pricing on renewing wide-beam services
for enterprise and wireless infrastructure related to activity in
Africa, and non-renewals of point-to-point services from customers
operating in Africa and Latin America. The network services decline
was also due to non-renewals of services related to the challenging
economic environment in Russia. The media increase resulted primarily
from growth in direct-to-home television services in the Latin
America, Caribbean and Africa regions, partially offset by declines in
the Asia-Pacific and North America regions.
-
Managed services reported an aggregate increase of $0.3
million, largely due to a net increase of $8.1 million in revenue from
network services customers for broadband services for primarily air
and maritime mobility applications, largely offset by declines in
revenue of $2.2 million from network services customers for
point-to-point trunking applications, which are switching to fiber
alternatives, and a $1.7 million decrease from media customers for
occasional video solutions.
Total Off-Network and Other Revenues reported an aggregate
decline of $11.8 million, or a decrease of 20 percent, to $47.0 million,
as compared to the three months ended March 31, 2016:
-
Transponder, MSS and other Off-Network services reported an
aggregate decrease of $10.8 million, primarily due to reduced sales of
customer premises equipment and decreases in services for government
applications, largely related to sales of Off-Network managed services.
-
Satellite-related services reported a slight aggregate decrease
of $1.0 million, primarily due to decreased revenue from professional
services supporting third-party satellites.
For the three months ended March 31, 2017, changes in operating
expenses, interest expense, net, and other significant income statement
items are described below.
Direct costs of revenue (excluding depreciation and amortization)
decreased by $3.0 million, or 3 percent, to $84.5 million, as compared
to the three months ended March 31, 2016. This reflects a decrease of
$8.4 million largely due to lower cost of sales for customer premise
equipment related to our government customer set and declines in cost of
Off-Network fixed satellite services and managed services capacity
purchased in support of our government business. This was partially
offset by an increase of $1.8 million in staff-related expenses in
relation to the company’s managed services strategy, an increase of $1.4
million in satellite-related insurance costs due to recent launches and
a $1.2 million increase in licenses and fees.
Selling, general and administrative expenses remained consistent
at $57.3 million, as compared to the three months ended March 31, 2016.
A $6.4 million increase in professional services fees were substantially
offset by a $6.6 million decline in bad debt expense from the Latin
America region.
Depreciation and amortization expense increased by $10.3 million,
or 6 percent, to $179.1 million, as compared to the three months ended
March 31, 2016.
Interest expense, net consists of the interest expense we incur
offset by interest income earned and the amount of interest we
capitalize related to assets under construction. Interest expense, net
increased by $29.3 million, or 14 percent, to $246.2 million for the
three months ended March 31, 2017, as compared to $216.9 million in the
three months ended March 31, 2016. This was principally due to a net
increase of $18.1 million in interest expense primarily driven by new
debt issuances in 2016, which was offset by certain discounted debt
repurchases and exchanges in 2016, and an increase of $10.4 million from
lower capitalized interest for the three months ended March 31, 2017,
primarily resulting from a decreased number of satellites and related
assets under construction.
The non-cash portion of total interest expense, net was $11.8 million
for the three months ended March 31, 2017, due to the amortization of
deferred financing fees and the accretion and amortization of discounts
and premiums.
Other income, net was $1.3 million for the three months ended
March 31, 2017, as compared to other expense, net of $0.6 million for
the three months ended March 31, 2016. The increase of $1.9 million was
primarily due to a $2.0 million increase in income related to our
business conducted in Brazilian reais.
Provision for income taxes was $6.8 million for the three months
ended March 31, 2017, as compared to $5.4 million for the three months
ended March 31, 2016. The increase was principally due to higher income
for our U.S. subsidiaries for the three months ended March 31, 2017.
Cash paid for income taxes, net of refunds, totaled $16.5 million
for the three months ended March 31, 2017, as compared to $11.6 million
for the three months ended March 31, 2016.
Net Income, Net Income per Diluted Common Share attributable to
Intelsat S.A., EBITDA and Adjusted EBITDA
Net loss attributable to Intelsat S.A. was $34.6 million for the
three months ended March 31, 2017, compared to net income attributable
to Intelsat S.A. of $15.3 million for the same period in 2016.
Net loss per diluted common share attributable to Intelsat S.A.
was $0.29 for the three months ended March 31, 2017, compared to net
income per diluted common share of $0.13 for the same period in 2016.
EBITDA was $398.1 million for the three months ended March 31,
2017, compared to $407.5 million for the same period in 2016.
Adjusted EBITDA was $409.8 million for the three months ended
March 31, 2017, or 76 percent of revenue, compared to $417.7 million, or
76 percent of revenue, for the same period in 2016.
Intelsat management has reviewed the data pertaining to the use of the
Intelsat network, and is providing revenue information with respect to
that use by customer set and service type in the following tables.
Intelsat management believes this provides a useful perspective on the
changes in revenue and customer trends over time.
|
|
|
|
|
|
|
|
|
|
|
|
|
By Customer Set
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2016
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network Services
|
|
|
$
|
227,687
|
|
41
|
%
|
|
|
$
|
212,933
|
|
39
|
%
|
|
Media
|
|
|
|
212,138
|
|
38
|
%
|
|
|
|
225,054
|
|
42
|
%
|
|
Government
|
|
|
|
103,532
|
|
19
|
%
|
|
|
|
91,919
|
|
17
|
%
|
|
Other
|
|
|
|
9,286
|
|
2
|
%
|
|
|
|
8,578
|
|
2
|
%
|
|
|
|
|
$
|
552,643
|
|
100
|
%
|
|
|
$
|
538,484
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Service Type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2016
|
|
|
2017
|
|
On-Network Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Transponder services
|
|
|
$
|
390,374
|
|
71
|
%
|
|
|
$
|
388,878
|
|
72
|
%
|
|
Managed services
|
|
|
|
100,614
|
|
18
|
%
|
|
|
|
100,917
|
|
19
|
%
|
|
Channel services
|
|
|
|
2,837
|
|
1
|
%
|
|
|
|
1,640
|
|
0
|
%
|
|
Total on-network revenues
|
|
|
|
493,825
|
|
89
|
%
|
|
|
|
491,435
|
|
91
|
%
|
|
Off-Network and Other Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Transponder, MSS and other off-network services
|
|
|
|
46,217
|
|
8
|
%
|
|
|
|
35,439
|
|
7
|
%
|
|
Satellite-related services
|
|
|
|
12,601
|
|
2
|
%
|
|
|
|
11,610
|
|
2
|
%
|
|
Total off-network and other revenues
|
|
|
|
58,818
|
|
11
|
%
|
|
|
|
47,049
|
|
9
|
%
|
|
Total
|
|
|
$
|
552,643
|
|
100
|
%
|
|
|
$
|
538,484
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow Used in Operations
Net cash provided by operating activities was $178.4 million for the
three months ended March 31, 2017, and free cash flow used in operations1
was $18.4 million for the same period. Free cash flow from (used
in) operations is defined as net cash provided by operating activities,
less payments for satellites and other property and equipment (including
capitalized interest) and other payments for satellites from financing
activities. Payments for satellites and other property and equipment
from investing activities during the three months ended March 31, 2017
was $178.5 million.
Financial Outlook 2017
Today, Intelsat reaffirmed its 2017 revenue and Adjusted EBITDA guidance
issued on February 28, 2017, in which the company expects the following:
Revenue: Intelsat forecasts full-year 2017 revenue to be in a
range of $2.180 billion to $2.225 billion.
Adjusted EBITDA: Intelsat forecasts Adjusted EBITDA performance
for the full-year 2017 to be in a range of $1.655 billion to $1.700
billion.
Capital Expenditures: As disclosed on February 28, 2017, in light
of the proposed Merger with OneWeb, we will defer providing guidance on
capital expenditures prior to the completion of the transaction. Once
the Merger is completed, the results of a thorough technical and
business evaluation will be quantified to produce a combined capital
expenditure plan.
1In this release, financial measures are presented both in
accordance with U.S. GAAP and also on a non-U.S. GAAP basis. EBITDA,
Adjusted EBITDA (or “AEBITDA”), free cash flow from (used in) operations
and related margins included in this release are non-U.S. GAAP financial
measures. Please see the consolidated financial information below for
information reconciling non-U.S. GAAP financial measures to comparable
U.S. GAAP financial measures.
Q1 2017 Quarterly Commentary
Intelsat provides a detailed quarterly commentary on the Company’s
business trends and performance. Please visit www.intelsat.com/investors
for management’s commentary on the Company’s progress against its
operational priorities and financial outlook.
Conference Call Information
Intelsat management will hold a public conference call at 8:30 a.m. ET
on Thursday, April 27, 2017 to discuss the Company’s first quarter
financial results for the period ended March 31, 2017. Access to the
live conference call will also be available via the Internet at www.intelsat.com/investors.
To participate on the live call, participants should dial +1
844-834-1428 from North America, and +1 920-663-6274 from all other
locations. The participant pass code is 92095288.
Participants will have access to a replay of the conference call through
May 4, 2017. The replay number for North America is +1 855-859-2056, and
for all other locations is +1 404-537-3406. The participant pass code
for the replay is 92095288.
About Intelsat
Intelsat S.A. (NYSE: I) operates the world’s first Globalized Network,
delivering high-quality, cost-effective video and broadband services
anywhere in the world. Intelsat’s Globalized Network combines the
world’s largest satellite backbone with terrestrial infrastructure,
managed services and an open, interoperable architecture to enable
customers to drive revenue and reach through a new generation of network
services. Thousands of organizations serving billions of people
worldwide rely on Intelsat to provide ubiquitous broadband connectivity,
multi-format video broadcasting, secure satellite communications and
seamless mobility services. The end result is an entirely new world, one
that allows us to envision the impossible, connect without boundaries
and transform the ways in which we live. For more information, visit www.intelsat.com.
Intelsat Safe Harbor Statement:
Some of the information and statements contained in this earnings
release and certain oral statements made from time to time by
representatives of Intelsat constitute "forward-looking statements" that
do not directly or exclusively relate to historical facts. When used in
this earnings release, the words “may,” “will,” “might,” “should,”
“expect,” “plan,” “anticipate,” “project,” “believe,” “estimate,”
“predict,” “intend,” “potential,” “outlook,” and “continue,” and the
negative of these terms, and other similar expressions are intended to
identify forward-looking statements and information. Forward-looking
statements include: our statements regarding certain plans,
expectations, goals, projections, and beliefs about the benefits of the
proposed merger and investment transactions, the transactions parties’
plans, objectives, expectations and intentions, and the expected timing
of completion of the proposed transactions; our expectation that the
launches of our satellites in the future will position us for growth;
our plans for satellite launches in the near to mid-term; our guidance
regarding our expectations for our revenue performance and Adjusted
EBITDA performance; our capital expenditure guidance over the next
several years; our belief that the scale of our fleet can reduce the
financial impact of satellite or launch failures and protect against
service interruptions; our belief that the diversity of our revenue and
customer base allow us to recognize trends across regions and capture
new growth opportunities; our expectation that developing differentiated
services and investing in new technology will allow us to unlock
essential opportunities; our expectations as to the increased number of
transponder equivalents on our fleet over the next several years; and
our expectations as to the level of our cash tax payments in the future.
The forward-looking statements reflect Intelsat's intentions, plans,
expectations, anticipations, projections, estimations, predictions,
outlook, assumptions and beliefs about future events and are subject to
risks, uncertainties and other factors, many of which are outside of
Intelsat's control. Important factors that could cause actual results to
differ materially from the expectations expressed or implied in the
forward-looking statements include known and unknown risks. Some of the
factors that could cause actual results to differ from historical
results or those anticipated or predicted by these forward-looking
statements include: risks associated with operating our in-orbit
satellites; satellite anomalies, launch failures, satellite launch and
construction delays and in-orbit failures or reduced performance;
potential changes in the number of companies offering commercial
satellite launch services and the number of commercial satellite launch
opportunities available in any given time period that could impact our
ability to timely schedule future launches and the prices we pay for
such launches; our ability to obtain new satellite insurance policies
with financially viable insurance carriers on commercially reasonable
terms or at all, as well as the ability of our insurance carriers to
fulfill their obligations; possible future losses on satellites that are
not adequately covered by insurance; U.S. and other government
regulation; changes in our contracted backlog or expected contracted
backlog for future services; pricing pressure and overcapacity in the
markets in which we compete; our ability to access capital markets for
debt or equity; the competitive environment in which we operate;
customer defaults on their obligations to us; our international
operations and other uncertainties associated with doing business
internationally; the possibility that the proposed Merger and SoftBank
Investment do not close when expected or at all; potential adverse
reactions or changes to business or employee relationships, including
those resulting from the announcement or completion of the proposed
Merger and SoftBank Investment; competitive responses to the proposed
Merger and SoftBank Investment; the possibility that the anticipated
benefits of the Merger and SoftBank Investment are not realized when
expected or at all, including as a result of the impact of, or problems
arising from, the integration of the two companies, or conditions
imposed in order to obtain regulatory approvals to complete the Merger
and SoftBank Investment; the possibility that the proposed Merger and
SoftBank Investment may be more expensive to complete than anticipated,
including as a result of unexpected factors or events; diversion of
management’s attention from ongoing business operations and
opportunities; the possibility that the condition to the Merger and
SoftBank Investment relating to the completion of exchange offers may
not be satisfied, or may be satisfied on different terms than currently
proposed; and litigation. Known risks include, among others, the risks
described in Intelsat’s annual report on Form 20-F for the year ended
December 31, 2016, and its other filings with the U.S. Securities and
Exchange Commission, the political, economic and legal conditions in the
markets we are targeting for communications services or in which we
operate and other risks and uncertainties inherent in the
telecommunications business in general and the satellite communications
business in particular.
Because actual results could differ materially from Intelsat's
intentions, plans, expectations, anticipations, projections,
estimations, predictions, outlook, assumptions and beliefs about the
future, you are urged to view all forward-looking statements with
caution. Intelsat does not undertake any obligation to update or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise.
|
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
($ in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31, 2016
|
|
|
Three Months
Ended
March 31, 2017
|
|
Revenue
|
|
|
$
|
552,643
|
|
|
|
$
|
538,484
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Direct costs of revenue (excluding depreciation and amortization)
|
|
|
|
87,460
|
|
|
|
|
84,461
|
|
|
Selling, general and administrative
|
|
|
|
57,130
|
|
|
|
|
57,295
|
|
|
Depreciation and amortization
|
|
|
|
168,880
|
|
|
|
|
179,132
|
|
|
Total operating expenses
|
|
|
|
313,470
|
|
|
|
|
320,888
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
|
239,173
|
|
|
|
|
217,596
|
|
|
Interest expense, net
|
|
|
|
216,910
|
|
|
|
|
246,246
|
|
|
Gain on early extinguishment of debt
|
|
|
|
-
|
|
|
|
|
504
|
|
|
Other income (expense), net
|
|
|
|
(582
|
)
|
|
|
|
1,344
|
|
|
Income (loss) before income taxes
|
|
|
|
21,681
|
|
|
|
|
(26,802
|
)
|
|
Provision for income taxes
|
|
|
|
5,389
|
|
|
|
|
6,840
|
|
|
Net income (loss)
|
|
|
|
16,292
|
|
|
|
|
(33,642
|
)
|
|
Net income attributable to noncontrolling interest
|
|
|
|
(966
|
)
|
|
|
|
(928
|
)
|
|
Net income (loss) attributable to Intelsat S.A.
|
|
|
$
|
15,326
|
|
|
|
$
|
(34,570
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share attributable to Intelsat S.A.:
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.14
|
|
|
|
$
|
(0.29
|
)
|
|
Diluted
|
|
|
$
|
0.13
|
|
|
|
$
|
(0.29
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED RECONCILIATION OF NET INCOME/(LOSS) TO EBITDA
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
2016
|
|
|
Three Months
Ended
March 31,
2017
|
|
Net income (loss)
|
|
|
$
|
16,292
|
|
|
|
$
|
(33,642
|
)
|
|
Add (Subtract):
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
216,910
|
|
|
|
|
246,246
|
|
|
Gain on early extinguishment of debt
|
|
|
|
-
|
|
|
|
|
(504
|
)
|
|
Provision for income taxes
|
|
|
|
5,389
|
|
|
|
|
6,840
|
|
|
Depreciation and amortization
|
|
|
|
168,880
|
|
|
|
|
179,132
|
|
|
EBITDA
|
|
|
$
|
407,471
|
|
|
|
$
|
398,072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Margin
|
|
|
|
74
|
%
|
|
|
|
74
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
Intelsat calculates a measure called EBITDA to assess the operating
performance of Intelsat S.A. EBITDA consists of earnings before net
interest, gain on early extinguishment of debt, taxes and depreciation
and amortization. Given our high level of leverage, refinancing
activities are a frequent part of our efforts to manage our costs of
borrowing. Accordingly, we consider gain on early extinguishment of debt
an element of interest expense. EBITDA is a measure commonly used in the
Fixed Satellite Services (“FSS”) sector, and we present EBITDA to
enhance the understanding of our operating performance. We use EBITDA as
one criterion for evaluating our performance relative to that of our
peers. We believe that EBITDA is an operating performance measure, and
not a liquidity measure, that provides investors and financial analysts
with a measure of operating results unaffected by differences in capital
structures, capital investment cycles and ages of related assets among
otherwise comparable companies.
EBITDA is not a measure of financial performance under U.S. GAAP, and
our EBITDA may not be comparable to similarly titled measures of other
companies. EBITDA should not be considered as an alternative to
operating income (loss) or net income (loss), determined in accordance
with U.S. GAAP, as an indicator of our operating performance, or as an
alternative to cash flows from operating activities, determined in
accordance with U.S. GAAP, as an indicator of cash flows, or as a
measure of liquidity.
|
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED RECONCILIATION OF NET INCOME/(LOSS) TO ADJUSTED EBITDA
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31, 2016
|
|
|
Three Months
Ended
March 31, 2017
|
|
Net income (loss)
|
|
|
$
|
16,292
|
|
|
|
$
|
(33,642
|
)
|
|
Add (Subtract):
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
216,910
|
|
|
|
|
246,246
|
|
|
Gain on early extinguishment of debt
|
|
|
|
-
|
|
|
|
|
(504
|
)
|
|
Provision for income taxes
|
|
|
|
5,389
|
|
|
|
|
6,840
|
|
|
Depreciation and amortization
|
|
|
|
168,880
|
|
|
|
|
179,132
|
|
|
EBITDA
|
|
|
|
407,471
|
|
|
|
|
398,072
|
|
|
Add:
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
|
7,669
|
|
|
|
|
4,902
|
|
|
Non-recurring and other non-cash items
|
|
|
|
2,530
|
|
|
|
|
6,864
|
|
|
Adjusted EBITDA
|
|
|
$
|
417,670
|
|
|
|
$
|
409,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin
|
|
|
|
76
|
%
|
|
|
|
76
|
%
|
|
|
|
|
|
|
|
|
Note:
Intelsat calculates a measure called Adjusted EBITDA to assess the
operating performance of Intelsat S.A. Adjusted EBITDA consists of
EBITDA as adjusted to exclude or include certain unusual items, certain
other operating expense items and certain other adjustments as described
in the table above. Our management believes that the presentation of
Adjusted EBITDA provides useful information to investors, lenders and
financial analysts regarding our financial condition and results of
operations, because it permits clearer comparability of our operating
performance between periods. By excluding the potential volatility
related to the timing and extent of non-operating activities, our
management believes that Adjusted EBITDA provides a useful means of
evaluating the success of our operating activities. We also use Adjusted
EBITDA, together with other appropriate metrics, to set goals for and
measure the operating performance of our business, and it is one of the
principal measures we use to evaluate our management’s performance in
determining compensation under our incentive compensation plans.
Adjusted EBITDA measures have been used historically by investors,
lenders and financial analysts to estimate the value of a company, to
make informed investment decisions and to evaluate performance. Our
management believes that the inclusion of Adjusted EBITDA facilitates
comparison of our results with those of companies having different
capital structures.
Adjusted EBITDA is not a measure of financial performance under U.S.
GAAP, and our Adjusted EBITDA may not be comparable to similarly titled
measures of other companies. Adjusted EBITDA should not be considered as
an alternative to operating income (loss) or net income (loss),
determined in accordance with U.S. GAAP, as an indicator of our
operating performance, or as an alternative to cash flows from operating
activities, determined in accordance with U.S. GAAP, as an indicator of
cash flows, or as a measure of liquidity.
|
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
CONSOLIDATED BALANCE SHEETS
|
|
($ in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
December 31,
2016
|
|
|
As of
March 31,
2017
|
|
|
|
|
|
|
|
(unaudited)
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
666,024
|
|
|
|
$
|
622,675
|
|
|
Receivables, net of allowance of $54,744 in 2016 and $52,481 in 2017
|
|
|
|
203,036
|
|
|
|
|
197,555
|
|
|
Prepaid expenses and other current assets
|
|
|
|
55,908
|
|
|
|
|
57,203
|
|
|
Total current assets
|
|
|
|
924,968
|
|
|
|
|
877,433
|
|
|
Satellites and other property and equipment, net
|
|
|
|
6,185,842
|
|
|
|
|
6,189,773
|
|
|
Goodwill
|
|
|
|
2,620,627
|
|
|
|
|
2,620,627
|
|
|
Non-amortizable intangible assets
|
|
|
|
2,452,900
|
|
|
|
|
2,452,900
|
|
|
Amortizable intangible assets, net
|
|
|
|
391,838
|
|
|
|
|
381,274
|
|
|
Other assets
|
|
|
|
365,834
|
|
|
|
|
389,896
|
|
|
Total assets
|
|
|
$
|
12,942,009
|
|
|
|
$
|
12,911,903
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
$
|
215,987
|
|
|
|
$
|
157,503
|
|
|
Taxes payable
|
|
|
|
16,733
|
|
|
|
|
7,544
|
|
|
Employee related liabilities
|
|
|
|
50,178
|
|
|
|
|
28,248
|
|
|
Accrued interest payable
|
|
|
|
204,840
|
|
|
|
|
289,918
|
|
|
Deferred satellite performance incentives
|
|
|
|
23,455
|
|
|
|
|
28,738
|
|
|
Deferred revenue
|
|
|
|
157,684
|
|
|
|
|
161,935
|
|
|
Other current liabilities
|
|
|
|
64,786
|
|
|
|
|
50,743
|
|
|
Total current liabilities
|
|
|
|
733,663
|
|
|
|
|
724,629
|
|
|
Long-term debt, net of current portion
|
|
|
|
14,198,084
|
|
|
|
|
14,209,427
|
|
|
Deferred satellite performance incentives, net of current portion
|
|
|
|
210,706
|
|
|
|
|
228,195
|
|
|
Deferred revenue, net of current portion
|
|
|
|
906,744
|
|
|
|
|
892,608
|
|
|
Deferred income taxes
|
|
|
|
168,445
|
|
|
|
|
172,177
|
|
|
Accrued retirement benefits
|
|
|
|
186,284
|
|
|
|
|
183,178
|
|
|
Other long-term liabilities
|
|
|
|
148,081
|
|
|
|
|
141,221
|
|
|
|
|
|
|
|
|
|
|
Shareholders' deficit:
|
|
|
|
|
|
|
|
Common shares; nominal value $0.01 per share
|
|
|
|
1,180
|
|
|
|
|
1,188
|
|
|
Paid-in capital
|
|
|
|
2,156,911
|
|
|
|
|
2,161,947
|
|
|
Accumulated deficit
|
|
|
|
(5,715,931
|
)
|
|
|
|
(5,750,501
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
(76,305
|
)
|
|
|
|
(74,741
|
)
|
|
Total Intelsat S.A. shareholders' deficit
|
|
|
|
(3,634,145
|
)
|
|
|
|
(3,662,107
|
)
|
|
Noncontrolling interest
|
|
|
|
24,147
|
|
|
|
|
22,575
|
|
|
Total liabilities and shareholders' deficit
|
|
|
$
|
12,942,009
|
|
|
|
$
|
12,911,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31, 2016
|
|
|
Three Months
Ended
March 31, 2017
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
16,292
|
|
|
|
$
|
(33,642
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
168,880
|
|
|
|
|
179,132
|
|
|
Provision for doubtful accounts
|
|
|
|
6,258
|
|
|
|
|
(329
|
)
|
|
Foreign currency transaction gain
|
|
|
|
(1,710
|
)
|
|
|
|
(1,539
|
)
|
|
Loss on disposal of assets
|
|
|
|
-
|
|
|
|
|
24
|
|
|
Share-based compensation
|
|
|
|
7,669
|
|
|
|
|
4,902
|
|
|
Deferred income taxes
|
|
|
|
(2,422
|
)
|
|
|
|
(1,325
|
)
|
|
Amortization of discount, premium, issuance costs and related costs
|
|
|
|
5,066
|
|
|
|
|
11,812
|
|
|
Gain on early extinguishment of debt
|
|
|
|
-
|
|
|
|
|
(504
|
)
|
|
Unrealized gains on derivative financial instruments
|
|
|
|
(764
|
)
|
|
|
|
-
|
|
|
Amortization of actuarial loss and prior service credits for
retirement benefits
|
|
|
|
840
|
|
|
|
|
893
|
|
|
Other non-cash items
|
|
|
|
1,191
|
|
|
|
|
18
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
5,476
|
|
|
|
|
6,653
|
|
|
Prepaid expenses and other assets
|
|
|
|
(11,840
|
)
|
|
|
|
(6,433
|
)
|
|
Accounts payable and accrued liabilities
|
|
|
|
(15,046
|
)
|
|
|
|
(39,932
|
)
|
|
Accrued interest payable
|
|
|
|
150,094
|
|
|
|
|
85,078
|
|
|
Deferred revenue
|
|
|
|
25,477
|
|
|
|
|
(23,408
|
)
|
|
Accrued retirement benefits
|
|
|
|
(2,413
|
)
|
|
|
|
(3,106
|
)
|
|
Other long-term liabilities
|
|
|
|
90
|
|
|
|
|
70
|
|
|
Net cash provided by operating activities
|
|
|
|
353,138
|
|
|
|
|
178,364
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Payments for satellites and other property and equipment (including
capitalized interest)
|
|
|
|
(227,176
|
)
|
|
|
|
(178,473
|
)
|
|
Purchase of cost method investments
|
|
|
|
(4,000
|
)
|
|
|
|
(16,000
|
)
|
|
Capital contributions to unconsolidated affiliates
|
|
|
|
(456
|
)
|
|
|
|
(3,022
|
)
|
|
Net cash used in investing activities
|
|
|
|
(231,632
|
)
|
|
|
|
(197,495
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
|
|
1,250,000
|
|
|
|
|
-
|
|
|
Debt issuance costs
|
|
|
|
(19,200
|
)
|
|
|
|
-
|
|
|
Payments on debt exchange
|
|
|
|
-
|
|
|
|
|
(14
|
)
|
|
Dividends paid to preferred shareholders
|
|
|
|
(2,480
|
)
|
|
|
|
-
|
|
|
Other payments for satellites
|
|
|
|
-
|
|
|
|
|
(18,333
|
)
|
|
Principal payments on deferred satellite performance incentives
|
|
|
|
(3,971
|
)
|
|
|
|
(4,570
|
)
|
|
Dividends paid to noncontrolling interest
|
|
|
|
(2,310
|
)
|
|
|
|
(2,500
|
)
|
|
Other financing activities
|
|
|
|
-
|
|
|
|
|
503
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
1,222,039
|
|
|
|
|
(24,914
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
237
|
|
|
|
|
696
|
|
|
Net change in cash and cash equivalents
|
|
|
|
1,343,782
|
|
|
|
|
(43,349
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
171,541
|
|
|
|
|
666,024
|
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
1,515,323
|
|
|
|
$
|
622,675
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
Interest paid, net of amounts capitalized
|
|
|
$
|
61,925
|
|
|
|
$
|
149,724
|
|
|
Income taxes paid, net of refunds
|
|
|
|
11,630
|
|
|
|
|
16,489
|
|
|
Supplemental disclosure of non-cash investing activities:
|
|
|
|
|
|
|
|
Accrued capital expenditures
|
|
|
$
|
98,090
|
|
|
|
$
|
46,775
|
|
|
Capitalization of deferred satellite performance incentives
|
|
|
|
31,600
|
|
|
|
|
27,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY OPERATING
ACTIVITIES
|
|
TO FREE CASH FLOW FROM (USED IN) OPERATIONS
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
|
Three Months
Ended
March 31,
|
|
|
|
|
2016
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
$
|
353,138
|
|
|
|
$
|
178,364
|
|
|
Payments for satellites and other property
and equipment (including capitalized
interest)
|
|
|
|
(227,176
|
)
|
|
|
|
(178,473
|
)
|
|
Other payments for satellites from financing activities
|
|
|
|
-
|
|
|
|
|
(18,333
|
)
|
|
Free cash flow from (used in) operations
|
|
|
$
|
125,962
|
|
|
|
$
|
(18,442
|
)
|
|
|
|
|
|
|
|
|
Note:
Free cash flow from (used in) operations consists of net cash provided
by operating activities, less payments for satellites and other property
and equipment (including capitalized interest) from investing activities
and other payment for satellites from financing activities. Free cash
flow from (used in) operations is not a measurement of cash flow under
U.S. GAAP. Intelsat believes free cash flow from (used in) operations is
a useful measure of financial performance that shows a company’s ability
to fund its operations. Free cash flow from (used in) operations is used
by Intelsat in comparing its performance to that of its peers and is
commonly used by financial analysts and investors in assessing
performance. Free cash flow from (used in) operations does not give
effect to cash used for debt service requirements and thus does not
reflect funds available for investment or other discretionary uses. Free
cash flow from (used in) operations is not a measure of financial
performance under U.S. GAAP, and free cash flow from (used in)
operations may not be comparable to similarly titled measures of other
companies. You should not consider free cash flow from (used in)
operations as an alternative to operating income (loss) or net income
(loss), determined in accordance with U.S. GAAP, as an indicator of
Intelsat’s operating performance, or as an alternative to cash flows
from operating activities, determined in accordance with U.S. GAAP, as
an indicator of cash flows, or as a measure of liquidity.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170427005347/en/
Source: Intelsat
Intelsat
Dianne VanBeber
Vice President, Investor Relations
and Corporate Communications
+1 703-559-7406
dianne.vanbeber@intelsat.com
